Despite the current economic challenges, 56 per cent of Australian SMEs are forecasting positive enterprise revenue over the next six months, the strongest growth outlook for the sector since March 2016.
On the other hand, 31 per cent of SMEs predicted their revenue will contract in the next six months, on average by 8.5 per cent, both record figures in the decade-long history of the index.
These insights come from the latest SME Growth Index released by non-bank business lender ScotPac which notes that the large discrepancies in revenue projections are a clear sign of the two-speed SME economy operating in Australia today.
Commenting on the report, ScotPac CEO, Jon Sutton pointed out that Tuesday’s Federal Budget would be critical to SME confidence in the next 12 months.
“This is by far the largest spread of revenue growth projections we have ever seen in the SME Growth Index, which is consistent with surging rates of insolvency in the past quarter,” Sutton said. “The fact that more than half of the country’s SME owners are predicting revenue growth is both remarkable and encouraging when you consider they continue to deal with the rising cost of doing business, particularly in key areas like wages, energy and interest rates.
“But there is no doubt that tough economic conditions and the end of government-backed pandemic relief measures in the past 12 months is taking a huge toll on cashflow-dependent businesses in many parts of the sector,” Sutton added. “The Albanese Government has publicly stated that SMEs will be ‘front and centre’ of the May Budget. It is critical for the confidence of SME owners and operators that the Budget delivers some material support to address the increasing cost and compliance pressures they are facing.”
The report also reveals that the average projected growth rate of SMEs forecasting positive enterprise revenue over the next six months is eight per cent, the most upbeat outlook in almost a decade, and six-month revenue forecasts for SMEs ranged from -20 per cent to +12.5 per cent, another record in the index. The average revenue growth projection across all SMEs was +two per cent.
Sutton encouraged all SME owners to engage regularly with their brokers and key advisors to assess their business options.
“The unfortunate fact is a lot of SME owners are not aware of the range of financial support options available to make running their business easier,” he said. “In some cases, a timely discussion with a broker or advisor could mean the difference between continuing to trade or closing the doors prematurely.”
